Americans pay nearly 90% of tariff costs, new study finds

Fed researchers tracked where tariff costs land

A new study from the Federal Reserve Bank of New York puts a number on who actually pays for tariffs, and it’s not foreign companies.

Economists Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein found that U.S. businesses and consumers shouldered close to 90% of the cost of President Trump’s 2025 tariffs.

The researchers used Census Bureau and trade data through November 2025 to reach their conclusions.

Tariff rates jumped fivefold in 2025

The average tariff rate on U.S. imports climbed from about 2.6% to 13% over the course of 2025. Most of that spike came after the “Liberation Day” tariffs rolled out in April.

Goods hit by tariffs saw prices rise roughly 11% more than goods that weren’t affected.

That kind of jump forced companies across the country to rethink their supply chains and find new ways to keep costs under control.

U.S. importers absorbed more early on

The burden didn’t stay the same all year. From January through August, U.S. importers covered about 94% of tariff costs.

That share dipped to around 92% in September and October as some foreign sellers started lowering their prices. By November, importers still absorbed about 86%.

The shift shows foreign exporters began picking up a slightly bigger piece, but American firms and shoppers kept carrying the bulk.

First-term tariffs followed the same path

This isn’t the first time researchers have tracked who pays. The New York Fed also looked back at Trump’s first-term tariffs from 2018 and 2019.

During that earlier round, foreign exporters didn’t meaningfully lower their prices to offset the new duties. The full cost landed on U.S. importers and got passed along to consumers.

The 2025 data, the researchers said, largely mirrors that same pattern.

German researchers found an even higher share

The Kiel Institute for the World Economy reached a similar conclusion in a January 2026 study, but with a starker number.

Its researchers found U.S. buyers absorbed about 96% of tariff costs, leaving foreign exporters covering just 4%. The team analyzed more than 25 million shipment records worth close to $4 trillion.

They also tested tariff shocks on Brazil and India and found exporters in those countries didn’t cut their prices either.

CBO breaks down who pays what

The Congressional Budget Office released its own findings the same week. It estimated foreign exporters bore only about 5% of tariff costs.

U.S. businesses swallowed roughly 30% through thinner profit margins in the short term. The remaining 70% landed on consumers through higher prices at the register.

Together, the three studies paint a consistent picture: the vast majority of tariff costs stay inside the United States.

White House says tariffs are working

The administration sees it differently. White House spokesperson Kush Desai pointed out that tariff rates have jumped nearly sevenfold, yet inflation has cooled and corporate profits have climbed.

The White House says its broader agenda of tax cuts, deregulation, tariffs, and energy policy is cutting costs and speeding up growth.

President Trump wrote in a Jan. 30 Wall Street Journal op-ed that the tariff burden has fallen on foreign producers and middlemen.

Tariff revenue hit $287 billion in 2025

U.S. customs duties, taxes, and fees totaled about $287 billion for the calendar year, according to the Federal Reserve Bank of Richmond. That marks a roughly 192% increase from the year before.

About a third of that total came in the fourth quarter alone, as tariff rates climbed.

Still, the revenue falls well short of closing the federal budget deficit, which remains far larger than what tariffs bring in.

Yale estimates $1,751 hit per household

The Yale Budget Lab put a dollar figure on what tariffs mean for everyday families. It estimated the average American household faces a loss of about $1,751.

The effective tariff rate now sits at about 16.9%, the highest since 1932. The pain isn’t spread evenly, either.

Lower-income households carry a heavier burden relative to what they earn, more than three times the share that the highest-income households face.

Economists project slower growth ahead

The Yale Budget Lab also projected tariffs will trim U.S. GDP growth by about 0.4 percentage points in 2026.

Over the long run, the economy could end up about 0.3% smaller, equal to roughly $100 billion a year in lost output.

Unemployment could rise by 0.6 percentage points by the end of 2026, and payroll employment could come in about 1.3 million jobs lower. Those numbers assume current tariff levels hold.

Supreme Court weighs tariff authority

The Supreme Court heard arguments on Nov. 5, 2025, over whether the law known as IEEPA actually gives the president authority to impose these tariffs.

Lower courts have ruled the tariffs unlawful, but they remain in place while the case plays out. During oral arguments, several justices appeared skeptical of the administration’s broad claims.

A ruling could come soon, but no date has been set. If the court strikes down the tariffs, the government could owe large-scale refunds to importers.

Congress pushes back on trade policy

The House of Representatives passed a resolution to overturn tariffs on Canada, and six House Republicans crossed party lines to vote with Democrats. That kind of bipartisan rebuke on trade policy is rare.

Meanwhile, consumer confidence recently dropped to its lowest level in more than 11 years. Americans told surveyors that tariffs ranked among their top concerns.

The combination of congressional pushback and falling confidence adds pressure on the administration’s trade agenda.

This article was created with AI assistance and human editing.

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